Bombay High Court: In a writ petition challenging the order of the National Consumer Disputes Redressal Commission, a Single Judge Bench of Somasekhar Sundaresan, J., held that the consumer complaint was not barred by limitation and that repudiation of the insurance policy by New India Assurance Co. Ltd. (‘New India’) on the ground of dishonour of premium cheque was unjustified. Emphasising that New India’s deficiency of service and operational negligence led to the dispute, the Court clarified that reliance on Section 64-VB of the Insurance Act, 1938 (‘Insurance Act’) was of no assistance. Consequently, the writ petition was dismissed.
Background:
The dispute arose from renewal of a fire and special perils insurance policy. The premium cheque was issued prior to expiry of the earlier policy, and New India issued the renewed policy. Two days later, torrential rains caused severe damage, and a claim was lodged. New India later claimed the cheque was dishonoured due to insufficient funds and purportedly cancelled the policy.
The bank confirmed that funds were sufficient and explained that dishonour was due to breakdown of infrastructure caused by floods. The complainant repeatedly followed up with New India which did not respond contemporaneously. Evidence showed that even in January 2006, New India was following up with its surveyor and processing the claim.
The petitioner contended that the complaint was hopelessly barred by limitation under Section 24A of the Consumer Protection Act, 1986 (‘Consumer Protection Act’) since it was not filed within two years from the alleged repudiation date. It was also argued that under Section 64-VB of the Insurance Act, no risk could be assumed unless premium was received in advance, and since the cheque was dishonoured, there was failure of consideration.
The respondent submitted that the cheque was issued well in advance, accepted by New India and the renewed policy was issued. New India’s delay in depositing the cheque and its wrongful claim of insufficiency of funds amounted to deficiency of service. It was further argued that New India never challenged the State Commission’s order and did not raise limitation before the National Commission, making it inappropriate to raise such grounds belatedly.
Analysis and Decision:
The Court emphasised that limitation is a mixed question of fact and law. It was noted that two concurrent forums had analysed the conduct of the insurer and returned reasonable findings. The Court observed that New India’s claim of repudiation having taken place on 04-08-2005 does not inspire confidence, since contemporaneous evidence showed that even in January 2006 the insurer was following up with its surveyor and processing the claim.
The Court highlighted that the complaint filed in August 2007 was within limitation if 31-01-2006 is taken as the date of accrual of cause of action. The Court further observed that cause of action remains flexible to be gathered from the bundle of facts in each case.
On the issue of premium, the Court noted that the cheque had been received well in advance, the renewed policy was issued, and the insurer had time to bank the cheque before coverage commenced. The Court emphasised that the dishonour was not due to insufficiency of funds but due to technical problems in the aftermath of the floods. It was observed that the insurer failed to prove its case and its own negligence in handling the cheque could not be used to repudiate the claim.
The Court stressed that reliance on Section 64-VB of the Insurance Act was of no assistance to the insurer. It was observed that receipt of amount by cheque is subject to realisation but if realisation was delayed owing to the insurer’s own deficiency in operational conduct, the consequence cannot be visited upon the consumer.
Consequently, the Court held that no case for intervention in writ jurisdiction was made out. It was observed that the National Commission had adopted a reasonable approach, assessing compensation based on a valuer’s report and discounting it to a fair and equitable amount.
The Court thus concluded that the insurer’s deficiency of service and operational negligence led to the situation, and the petition was dismissed with costs.
[New India Assurance Co. Ltd. v. Gayatridham Phase Co-op Housing Society, W.P. No. 12510 of 2024, decided on 15-12-2025]
Advocates who appeared in this case:
For the Petitioner: Rushabh Vidyarthi with Mohit Turakhia
For the Respondent: Ashutosh Marathe, Ajit M. Savagave, Savina Crasto, AGP